Derivatives are by far the most popular financial instrument in the world. The total value of derivatives in TradFi is estimated to be worth over $1 quadrillion compared to just $130 trillion for bonds and $70 trillion for stocks. According to some experts, the global derivatives market could be more than 10x the size of the worldwide GDP. 
As the decentralized financial system continues to grow, derivatives have gained enormous traction in DeFi. Let’s dive into what derivatives are and how they are flourishing in DeFi.
What are derivatives?
In simple terms, derivatives are contracts that derive their value from another asset or index such as stocks, gold, real estate, stablecoins, cryptocurrencies, and much more. 
Derivatives can be traded on an exchange or over the counter. Most of the derivatives in TradFi are traded over the counter. Traders are optimistic about decentralized derivatives because anyone can create contracts in an transparent and permissionless way, according to

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